Industry News | August 9, 2011 | QSR Exclusive Brief

The Melt Takes On Latest Trend: Grilled Cheese

Jonathan Kaplan made his fortune selling the rights to Flip Video to Cisco Systems for $590 million in 2009. Now, entrepreneur Kaplan has set his sights upon his second business: The Melt, a chain of fast-casual grilled cheese cafes. 

Despite his lack of industry background, Kaplan has one advantage over other fledgling restaurateurs: an ability to raise capital. Sequoia Capital, the venture fund that backed Apple and Google, invested $10 million in The Melt. That furnishes Kaplan with the financial cushion to launch the four cafés and consider expanding in 2012.

The Melt is opening four outlets: three in San Francisco and one in Palo Alto, California, in 2011. One will open in August, two in September, and a fourth in November. Stores are open from 11 a.m. until 7 p.m. and also sell beer and wine.

Menus at The Melt are streamlined and simple: there are five combinations of soups and sandwiches, all playing off basic Cheddar cheese. Items include the Classic, Cheddar on potato bread with tomato soup; the Mission, Pepper Jack on sourdough with tortilla soup and gourmet options such as goat cheese with carrot ginger soup. Sandwich/soup combos cost $8 and are in line with prices at chief competitors Panera Bread and Chipotle. The Melt, sticking to its guns with grilled cheese, will not have turkey, tuna salad, or meatloaf on the menu.

The Melt also employs new media to attract Millennials and others who order sandwiches online or via mobile devices. Consumers are sent a bar code, which they bring to the counter, and since sandwiches are made so quickly, there is little or no waiting – a perfect option for business people on the run.

The Melt’s target audience will be “the day-time urban market, based on our ability to turn around sandwiches in two minutes,” explains Jim Ryan, The Melt’s vice president of business development and former co-founder of Extreme Pizza.

Ryan expects lunch to generate most of its traffic but expects the cafés located in high traffic malls will attract dinner trade. He says The Melt’s sandwich has unique Parmigiana and herb seasoning, and the panini press can’t easily be duplicated at home.

While future openings will depend on how well the concept performs in the initial launch period, The Melt’s internal goal is to open 25 new outlets in 2012.

As the economy continues to bounce back, The Melt can capitalize on consumers’ “pent-up demand to use restaurants,” explains Hudson Riehle, SVP for research at the National Restaurant Association.  Moreover, he says, “the popularity of sandwiches has been increasing from breakfast to dinner.” Indeed, restaurant sales in the U.S. rose 3.6 percent in 2011 to total $604 billion. 

Ryan expects grilled cheese to resonate with a cross-section of consumers. “Grilled cheese is quintessential American food with a nostalgic flair,” Ryan says. “Everyone grew up on grilled cheese.”

By Gary M. Stern